One of the biggest questions we hear from new clients is about tax abatements and how do they work? When you build a new home or invest in renovations, your property taxes can go up as you increase the valuation of your property.
The City of Cincinnati’s Residential Property Tax Abatement makes it possible for property owners to minimize the taxes they pay as the abatement only requires owners to pay taxes on the “pre-improvement” value of their property for 10-15 years.
WHY DOES CINCINNATI OFFER THIS TAX ABATEMENT PROGRAM?
The tax abatement program is important for Cincinnati for several reasons, including:
What’s important to understand about this last bullet point and high-quality sustainable homes is that the range in years and abatement value is relational to whether or not it’s tied to a LEED (Leadership in Energy and Environmental Design) certification level.
LEED OVERVIEW
The goal for LEED certification is to provide a framework for healthy, highly efficient, and cost-saving green buildings. LEED certification comes in multiple levels and earn points for various green building strategies across several categories based on the number of points achieved. A project can earn one of four LEED rating levels: Certified, Silver, Gold or Platinum.
**Note that City of Cincinnati program has implemented changes to the tax abatement program. Below are the old rules that still impacts a few of our new construction properties as you’ll see advertised on the listings.**
TAX ABATEMENT VALUES ON LEED CERTIFIED NEW CONSTRUCTION HOMES – The “OLD” Rules
The abatement amount increases all the way to an unlimited value dependent upon the LEED certification level as you can see from the chart below.
|
LEED Certification Level |
Max Abatement Value |
Term (Years) |
|
Non-LEED Certified |
$275,000 |
10 |
|
LEED Certified |
$275,000 |
12 |
|
LEED Silver |
$400,000 |
15 |
|
LEED Gold |
$562,000 |
15 |
|
LEED Platinum |
Unlimited |
15 |
TAX ABATEMENT SAVINGS EXAMPLE – The “OLD” Rules
The tax savings from purchasing a LEED certified home add up and a home that initially seemed unaffordable could work within your monthly budget. Let’s take a look at a recent example for a LEED Platinum Certified home, based on a land value of $162,500.
|
LEED Platinum Abated Monthly Payment |
Property with an Equivalent Monthly Payment |
|
|
Purchase Price |
$1,095,000 |
$750,000 |
|
Down Payment TBD |
$219,000 |
$150,000 |
|
P&I @ 3% Interest Rate |
$3,693 |
$2,530 |
|
Taxes* |
$295 |
$1,555 |
|
Insurance |
$274 |
$188 |
|
Total Monthly Payment |
$4,262 |
$4,273 |
This is all dependent upon the initial “pre-improvement” land value of a lot and the LEED certification level, so these rates are all variable.
TAX ABATEMENT VALUES ON LEED CERTIFIED NEW CONSTRUCTION HOMES – Updated with 2022 Changes
The abatement amount increases all the way to an unlimited value dependent upon the LEED certification level as you can see from the chart below.
|
LEED Certification Level |
Max Abatement Value |
Term (Years) |
|
Non-LEED Certified |
$200,000 |
10 |
|
LEED Certified |
$200,000 |
10 |
|
LEED Silver |
$400,000 |
15 |
|
LEED Gold |
$500,000 |
15 |
|
LEED Platinum |
$650,000 |
15 |
OTHER HOMEOWNER BENEFITS
Besides saving on your monthly payment for taxes, there are other benefits to owning a LEED Certified tax abated home. First, the abatement is transferrable from homeowner to homeowner during the abatement term, thus increasing your home’s resale value. Additionally, you will be saving on energy bills from the building efficiencies of a green home.
ADDITIONAL INFORMATION AND RESOURCES
Please visit choosecincy.com for additional information on the City of Cincinnati tax abatement program (aka Community Reinvestment Area).
*Taxes estimated from hamiltoncountyauditor.org
Owning a home is a keystone of wealth… both financial affluence and emotional security.
